Macquarie Group has raised its price targets for Australia’s big four banks, signaling better credit quality and lower risks in the sector. This move comes as investors eye potential buys amid recent share price dips, with the upgrades announced on September 24, 2025, in a fresh research note.
What the Upgrades Mean for Investors
The big four banks include Commonwealth Bank of Australia (CBA), ANZ Group Holdings, Westpac Banking Corporation, and National Australia Bank (NAB). Macquarie’s latest analysis points to stronger earnings from improved credit trends over the past five years.
This upgrade reflects tightened underwriting standards and smarter risk management across the banks. These changes have cut loan losses and boosted overall stability in Australia’s banking system.
Experts note that while shares have climbed a lot lately, some like CBA are now trading 13 percent below their highs. This could open doors for value hunters, but Macquarie warns about weak revenue growth ahead.
Key Reasons Driving the Changes
Macquarie highlights several trends shaping the “new normal” in banking. Credit quality has improved thanks to better economic conditions and stricter lending rules.
Lower impairment risks and steady credit growth also play a big role. Banks have managed risks well, leading to fewer bad loans and more reliable profits.
However, the broker points out challenges like soft revenue outlooks and possible hits to capital reserves. These factors suggest the sector still faces headwinds from interest rate shifts and global events.
Recent data shows Australia’s economy grew by 1 percent in the June quarter of 2025, supporting bank lending. Yet, inflation worries linger, with core rates at 4 percent yearly, as noted in broader market reports.
- Improved credit quality: Driven by tightened standards and better management.
- Lower loan losses: Resulting from reduced risks in the system.
- Solid growth: Backed by steady credit expansion despite economic pressures.
How the Big Four Banks Stack Up
Each bank has its strengths in the upgrade. CBA remains a favorite for its strong market position, but Macquarie prefers NAB right now for its lending rebound.
ANZ and Westpac also get boosts, with targets reflecting their progress in risk control. Investors should watch for quarterly updates, as three of the big four are set to report soon.
| Bank | Previous Target (AUD) | New Target (AUD) | Potential Upside (%) |
|---|---|---|---|
| CBA | 120 | 135 | 12 |
| ANZ | 28 | 32 | 14 |
| Westpac | 25 | 29 | 16 |
| NAB | 35 | 40 | 15 |
This table shows estimated upgrades based on recent broker notes. Actual figures may vary, but they highlight growth potential.
Market sentiment is positive, with ASX bank shares up overall in 2025. For example, NAB saw a 6 percent loan growth acceleration in the June quarter.
Risks and Opportunities Ahead
While the upgrades are good news, Macquarie advises waiting for better entry points. Weak revenue and capital risks could pressure shares if economic conditions worsen.
Global factors like U.S. Federal Reserve moves and Australia’s Reserve Bank decisions add uncertainty. The RBA held rates steady in its latest meeting, but hikes could return if inflation persists.
On the bright side, banks are expanding into areas like high-interest savings accounts. Macquarie itself is challenging the big four with new products targeting Australia’s 1.6 trillion dollars in savings.
What Should Investors Do Next
For those building portfolios, these upgrades suggest the big four could offer solid dividends and stability. High yields have long attracted ASX investors, and current prices might tempt buyers.
Compare options outside the big four too, as smaller ASX banks showed strong gains in 2024. Diversify to balance risks in this evolving sector.
Experts recommend tracking earnings seasons, with predictions pointing to steady but cautious growth for 2025.
Share your thoughts on these bank upgrades in the comments below, and pass this article along to fellow investors for more discussion.
